Amendment to SEBI Circular pertaining to Investor Protection Fund (IPF)/Investor Service Fund (ISF) and its related matters
Summary
This circular amends the guidelines for the Investor Protection Fund (IPF) and Investor Service Fund (ISF) by substituting Clause 2(g) regarding the determination of legitimate claims. It mandates that stock exchanges place claims before the Member Core Settlement Guarantee Fund Committee (MCSGFC) for sanction after a member is declared a defaulter. The provisions become effective from January 1, 2022, requiring stock exchanges to amend their bye-laws and report implementation status.
Text
Clause 2 (g) shall be substituted with the following: 'The Stock Exchanges shall ensure that once a member has been declared defaulter, the claim (s) shall be placed before the Member Core Settlement Guarantee Fund Committee (MCSGFC... for sanction and ratification.'
MCSGFC’s advice w.r.t. legitimate claims shall be sent to the IPF Trust for disbursement of the amount immediately.
In case the claim amount is more than the coverage limit under IPF or the amount sanctioned and ratified by the MCSGFC is less than the claim amount then the investor will be at liberty to prefer for arbitration outside the exchange mechanism / any other legal forum outside the exchange mechanism for claim of the balance amount.
The provisions of this circular shall come into effect from January 1, 2022.
Make necessary amendments to the relevant bye-laws, rules and regulations.
Communicate to SEBI, the status of the implementation of the provisions of this circular through the Monthly Development Report (MDR).
This Circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956...
Source: SecMarx — Amendment to SEBI Circular pertaining to Investor Protection Fund (IPF)/Investor Service Fund (ISF) and its related matters. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.